Summer Infant 1Q revenue up 23% over last year
Projects a sequential increase in revenues and earnings in 2Q
Gerri Hunt -- Kids Today, 5/15/2009 9:36:00 AM
WOONSOCKET, R.I. – Juvenile product designer, marketer and distributor, Summer Infant, Inc. said its first quarter net revenue was $34.8 million, a 23% increase from $28.4 million in the first quarter of 2008, driven primarily by new product lines acquired from Basic Comfort and Kiddopotamus.
Net revenues in the first quarter of 2009 increased slightly as compared to the pro forma revenue of $34.4 million in the first quarter of 2008, which assumes the Basic Comfort and Kiddopotamus acquisitions occurred on January 1, 2008. The acquisitions actually occurred on March 31 and April 18, 2008, respectively.
Summer Infant's net income was $400,000, or 3 cents per share, compared to $1 million, or 7 cents per share, in the first quarter of 2008.
Gross profit for the first quarter of 2009 was $11.7 million, a 17% increase compared to $9.9 million in the first quarter of 2008. Gross margin for the first quarter of 2009 was 33.5%, a decrease from 35.0% in the first quarter of 2008.
Gross margins were negatively impacted year over year by an increase in the sales of closeout inventory and a change in product mix, as sales were greater in relatively lower margin product categories. Excluding sales of closeout inventory in the first quarter of 2009, gross margin was 34.9%, as compared to 35.3% in the fourth quarter of 2008.
Operating income was $1 million in the first quarter of 2009, compared to $2 million in the first quarter of 2008. EBITDA was $2.4 million for the first quarter of 2009 compared to $2.6 million for the first quarter of 2008.
As of March 31, 2009, the company had approximately $800,000 of cash and $42.3 million of debt on the balance sheet. On a pro forma basis, the ratio of net debt to EBITDA was 3.1 times as of March 31, 2009. The majority of the debt matures in fiscal 2011. The company is in compliance with all debt covenants and continues to be able to access its credit lines.
“We are pleased with our performance in the first quarter in this tough operating environment,” commented Jason Macari, chairman and CEO of Summer Infant. “While shipments in February and March were solid, it was not enough to offset the slowdown in January revenues due to the sharp reduction in inventory levels at our major retail customers heading into their January fiscal year-end.
“Based on sales trends so far in the second quarter, retailer ordering rates appear to have stabilized,” he continued. “In addition, our 2009 product lineup continues to gain momentum on our customers’ shelves, and as a result, we have experienced a pickup in shipments on many of these new items. Assuming ordering trends and retail sell through remain at current levels, we anticipate revenues and earnings in the second quarter of 2009 to be up on a sequential basis from the first quarter.”
Macari said the company is encouraged by the stabilization in retail ordering trends over the past few months, and is taking steps to position it to grow.
Summer Infant is refining its product mix by eliminating underperforming SKUs and focusing on the best performing items.
“These actions, combined with lower commodity costs, should benefit gross margins beginning in the second quarter. These initiatives also drove a $3.8 million inventory reduction in the quarter,” said Macari.
The company is also reducing its workforce and consolidating its warehousing facilities based on sales trends.
The company also sold a building in March, resulting in a $4 million bank debt reduction.
Summer Infant sells proprietary products in a number of different categories, including nursery audio/video monitors, safety gates, durable bath products, bed rails, infant thermometers and related nursery, health and safety products, booster and potty seats, soft goods, bouncers, travel accessories, highchairs and swings.
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